The main risk that investment banks face from their underwriting services is:
A. the client will not pay for the service.
B. the company issuing the securities will go bankrupt.
C. the price paid by investors exceeds the guaranteed price to the issuing firm.
D. the price investors pay for the security is less than the guaranteed price to the issuing firm.
Answer: D
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If good "A" is represented on the horizontal axis and good "B" on the vertical axis, then the steeper the production possibilities frontier at a given level of production of good "A," the
a. larger the opportunity cost of producing an extra unit of good "A." b. larger the quantity of resources being devoted to the production of good "B." c. smaller the quantity of resources being devoted to the production of good "A." d. smaller the opportunity cost of producing an extra unit of good "A." e. greater the returns to scale in the production of good "A."
A technological advance that increases the productivity of teachers can be expected to have what effects on the equilibrium labor market for teachers?
a. Wages will fall, and quantity of labor will rise. b. Wages will rise, and quantity of labor will rise. c. Wages will rise, and quantity of labor will fall. d. Wages will fall, and quantity of labor will fall.
If the reserve requirement is 12 percent and banks desire to hold no excess reserves, when a bank receives a new deposit of $1,000,
a. it must increase its required reserves by more than $150. b. its total reserves initially increase by $120. c. it will be able to make new loans up to a maximum of $880. d. None of the above is correct.
Congress has divided the authority to police mergers between the Antitrust Division of the U.S. Department of Justice (AD) and the Federal Trade Commission (FTC). How is this authority divided?
A) The AD decides whether proposed horizontal mergers will be challenged; the FTC decides whether proposed vertical mergers will be challenged. B) Both the AD and the FTC are responsible for merger policy. C) The AD always renders its opinion on any proposed merger first. If the AD approves the merger, the case then goes to the FTC for final approval. If the AD disallows the merger, the decision stands and the FTC does not become involved. D) The AD establishes the guidelines that are used to evaluate proposed mergers; the FTC uses these guidelines to decide whether a proposed merger will be allowed to take place.